Should You Make Biweekly Mortgage Payments? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
Brian Goodman/Shutterstock October 17, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. TJ Porter is a contributing writer for Bankrate. TJ writes about a range of subjects, from to . Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Most homeowners once a month. However, unless you have a prepayment penalty — and that’s unlikely — you can chip away at your outstanding balance on a more frequent basis. With a , you can make half your normal monthly payment every two weeks and pay down your mortgage faster. How do biweekly mortgage payments work
A typical mortgage payment is due on the first of the month, and it includes repayment of principal and interest, plus additional money if you’re contributing property taxes and homeowners insurance to an escrow account, as well as mortgage insurance and HOA fees, if applicable. As you begin paying back your mortgage, the majority of each of your payments actually goes to interest — so your lender is making a lot of money, while you’re barely making a dent in the principal. Let’s say you buy a $350,000 home tomorrow with a 30-year mortgage and a 10 percent down payment. Your principal is $315,000, and your is 7 percent. Your first mortgage payment breakdown would look like this: Monthly payment Principal Interest $2,095 $257.50 $1,837.50 A biweekly mortgage payment plan involves making half of that mortgage payment, or $1,047.50, every two weeks, for a total of 26 payments each year. At that rate, by the end of the year, you’d have paid $27,235 — $2,095 more than what you would have paid if you had made payments once a month. That , though, goes entirely toward your principal, adding up to a huge chunk of savings and a much faster payoff: Interest total Payoff time Monthly payments $439,453 30 years Biweekly payments $327,470 23 years Pros and cons of biweekly mortgage payments
Pros
Long-term savings: The biggest upside to biweekly mortgage payments — which is equivalent to making one extra payment a year — is the ability to save big on interest. For example, on that $315,000 biweekly mortgage, you’d save more than $31,000 in interest in the first 10 years versus making standard monthly payments. Faster path to equity: Whether you’re planning to stay in the home forever or sell it before your loan term is up, it’s never a bad thing to accumulate more . You’ll either pay off the loan and live mortgage-debt free, or be able to take more of the profit from a sale. If you’re still in the house, that equity also gives you a you can tap in the future. Extra financial discipline: Contributing more money to your debt payments can help you establish smart money behaviors instead of spending your extra cash. Cons
Potential impact on other savings goals: Before you commit to making biweekly mortgage payments, consider whether doing so would benefit your overall . A biweekly strategy means putting more money toward your mortgage every year, which could pull from other financial obligations like . Additionally, if you’re trying to pay off , the 16 percent APR attached to your credit card, for example, should be a bigger priority than the single-digit APR attached to your mortgage. As you assess your budget, see if the savings outweigh any losses elsewhere. Possible prepayment penalty: Although not common, some mortgages come with a that lenders charge if a borrower pays off the loan sooner than the repayment schedule dictates. Lenders can impose prepayment penalties in several different ways, such as charging 2 percent to 4 percent of the balance or a flat fee, like $3,000. Carefully read your loan documents or contact your servicer to see if you’d be subject to this fee. (Keep a record of who you spoke to in case there’s an issue later on.) May require some extra setup: Lenders want to earn their share of interest, so arranging biweekly payments might not be that simple. Before making the extra payments, contact your servicer to coordinate your payment plan and verify that your additional amount will go toward the principal. Again, keep track of who you spoke with and get confirmation of your conversation in writing. How to set up a biweekly mortgage payment plan
Get in touch with the company that services your loan (this might or might not be your lender — here’s ). If your lender allows biweekly payments and applies the extra payments directly to your principal, you can simply send half your mortgage payment every two weeks. If your monthly payment is $2,000, for instance, you can send $1,000 biweekly. You can also divide your monthly payment by 12 and park that amount in a each month, then send the accumulated amount to your lender as an extra payment that goes solely toward the principal at the end of the year. To confirm your biweekly mortgage payment plan works the way you intend it to, make sure that: Your lender allows a biweekly mortgage payment plan. Extra payments are applied to the principal. There are no prepayment penalties. No fees are charged for setting up or maintaining a biweekly payment plan. Your interest rate remains fixed for the life of the loan. Lastly, keep in mind your monthly payment includes property taxes and homeowners insurance, so make sure to ask your lender if these payments would inflate your escrow cushion. Are biweekly mortgage payments right for me
Ask yourself: What does my savings account look like? Getting on a faster path to being debt-free feels good, but it shouldn’t be at the expense of your . Biweekly payments are generally only worth it if you have the cash to spare and won’t be stretching yourself too thin. What other debts am I paying? If you’re still paying off your car, student loans or credit cards, consider the interest rate attached to them. You might be better off getting any other debts down to zero before shifting your attention to your mortgage. What’s my interest rate? The higher your mortgage rate is, the more you’ll be able to save with biweekly payments. If you managed to lock in a record-low mortgage rate — somewhere in the neighborhood of 3 percent — you’ve already done a good job of lowering your interest charges. Do I receive quarterly or yearly commissions? Remember: The biweekly payment schedule adds up to one additional monthly payment amount each year. If switching to more frequent payments complicates your life or your arrangement with your lender, you can also opt for sending one large additional sum to pay down the principal. If you work in sales and receive regular commission payouts, consider using those bigger paychecks for extra payments. Would I be better off investing the extra cash? ? That’s a big question that doesn’t necessarily have an easy answer. While the market is facing some serious headwinds right now, those with a decent risk tolerance — and a long time horizon — might opt for putting money in the stock market in the hopes of generating a bigger return. On the other hand, eliminating debt is one of the best “investments” you can make, because it frees up your cash and lowers the cost of any future debt you take on. Bottom line
If done right, making biweekly mortgage payments leads to less interest paid over the life of your loan, saving you money and whittling your balance down sooner. However, you must confirm that the extra payments are being applied to the principal, and make sure you’re not subject to prepayment penalties. Remember too that in some cases, paying off your mortgage at a faster pace means you’re taking money away from other financial obligations. Before you commit to biweekly payments, take a thorough look at your and goals. SHARE: TJ Porter is a contributing writer for Bankrate. TJ writes about a range of subjects, from to . Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Related Articles